The body of Alan McMenemy, the British security guard kidnapped in Iraq more than four years ago, will be released without conditions, according to the leader of the Iranian-backed Shia militia that seized him with three other bodyguards – appearing to finally confirm that the Glaswegian has been killed.

McMenemy was kidnapped by Asaib al-Haq (Leagues of Righteousness), along with computer programmer Peter Moore and three employees of the Canadian firm Gardaworld in 2007. Moore was released and the bodies of three security guards were returned in 2009 but McMenemy's fate was unknown, until now.

Qais al-Khazali, a Shia cleric who leads the militia, said the guards were killed in a clash when they tried to escape. "The brothers told me that those four bodyguards tried to escape … they took advantage of a negligent moment and took the weapon of one of their guards and the clash ensued and led to this result. We honestly are sorry for that incident," Khazali told Reuters.

Asked why Asaib had not returned McMenemy's body to his family – which encouraged speculation that the guard was still alive – Khazali said the militia was prepared to hand over the remains unconditionally.

"We have no problem. We have been ready to hand him over for a while. We have no specific demand to hand him over and we have no problem in handing him over. It is a logistical issue," he said.

The Foreign Office said it was "working with the Iraqi authorities and others to bring this matter to resolution".

McMenemy's parents said they had no comment to make yet on what would mark the end of the longest hostage taking involving Britons since the Lebanon kidnappings in the 1980s.

An inquest in 2011 heard that the three other bodyguards – Jason Creswell, Jason Swindlehurst and Alec MacLachlan – were subjected to mock executions, regularly beaten and kept chained and blindfolded for long periods before they were shot dead by their captors.

Last night, Moore told Channel 4 News: "It's obviously going to bring closure to the whole hostage situation of Iraq, in terms of the British side.

"We've been waiting for the body for a long time. When I was released I was told by Qais al-Khazali that the body would be released with me, and obviously that never happened.

"So I've been waiting for the body to be released. It's so long, it's never going to go away from any of our lives. But it is important to move on. We don't have to forget but we have to keep living, and this is the end of the chapter, sort of thing.

"It is the end of the book."

An investigation by Guardian Films revealed that the Shia militia was a front for the Iranian Quds force and the motives for the abduction was retaliation for the arrest of key Iranians in Iraq by the US.

The abduction was also driven by a desire to prevent Moore from installing a sophisticated tracking system that would show how billions of pounds in international aid money from Iraqi institutions were diverted to Iranian-backed militia groups in Iraq.

General David Petraeus, then US commander in Iraq, said the men were taken to Iran 24 hours after they were abducted from a finance ministry building in downtown Baghdad.

The Guardian established British special forces were scrambled from Basra to try to intercept the kidnap group and stop them from crossing the border into Iran.

But Khazali told Reuters that Moore "was in another place" at the time of the "clash" that killed him.